Opinion
No. CV 07 5010892
December 19, 2007
MEMORANDUM OF DECISION Re Motion to Strike (#103)
ISSUE
The defendant CPM Insurance Services, Inc. (CPM) moves to strike the second and third counts of the plaintiff's complaint which alleges causes of actions against the defendant insurance broker for breach of contract and CUTPA violations. The defendant asserts that those counts are based primarily on negligence allegations and therefore are not legally sufficient.
FACTS
On April 30, 2007, the plaintiff, Frank DeCrescenzo, filed a three-count complaint against the defendant, CPM. The complaint includes the following allegations. DeCrescenzo owns a restaurant and bar (bar) in Naugatuck. CPM held itself out to the public as a full service insurance brokerage firm and agency. In November and December 2005, DeCrescenzo met with CPM and filled out applications for liquor liability insurance and general liability insurance for the business. DeCrescenzo informed CPM of his anticipated insurance needs, including the need for liquor liability coverage, and CPM agreed to initiate the process by which DeCrescenzo could apply for and obtain the desired insurance. On December 2, 2005, DeCrescenzo signed a Commercial Premium Finance Agreement with a CPM-owned entity, pursuant to which DeCrescenzo paid $2,896.18 towards a liquor liability policy and a general liability insurance policy.
DeCrescenzo obtained a liquor license on March 13, 2006, and immediately forwarded pertinent license information to CPM. CPM failed to forward the license information to an insurer until sometime after March 24, 2006. On June 15, 2006, DeCrescenzo was served with a notice of intent to sue; the notice alleged that on March 23 and March 24, 2006, Justin W. Kane and another person were served alcohol at DeCrescenzo's bar, and that their alcohol consumption was a factor in causing a motor vehicle accident that resulted in Kane's death. DeCrescenzo was served with a complaint in January 2007, at which point he promptly reported the potential claim to CPM. DeCrescenzo then learned that CPM had never obtained liquor liability coverage for the bar. Due to CPM's failure to obtain coverage or to keep DeCrescenzo informed as to the status of his coverage, DeCrescenzo has incurred damages and losses and will continue to do so because of the pending lawsuit regarding Kane's death.
Count one alleges negligence on CPM's part, count two alleges breach of contract, and count three alleges violations of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq.
On July 9, 2007, CPM filed a motion to strike counts two and three, as well as a memorandum of law in support of its motion. CPM's grounds for striking the breach of contract count are that DeCrescenzo does not allege a specific offer made by CPM assuring a specific outcome but rather alleges that CPM agreed to assist the plaintiff in procuring business insurance. The essence of the second count is really a negligence claim recast as a breach of contract claim. CPM's grounds for striking the CUTPA count are that DeCrescenzo does not allege immoral, unscrupulous conduct giving rise to a legally sufficient CUTPA claim, the count is nothing more than a professional negligence claim and DeCrescenzo has failed to allege violations of the Connecticut Unfair Insurance Practices Act (CUIPA), General Statutes § 38a-815 et seq. which precludes a finding of liability under CUTPA. DeCrescenzo filed a memorandum in opposition to the motion on August 1, 2007, and CPM filed a reply memorandum on September 7, 2007.
DISCUSSION
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "It is fundamental that in determining the sufficiency of a complaint challenged by a defendant's motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted." (Internal quotation marks omitted.) Violano v. Fernandez, 280 Conn. 310, 318, 907 A.2d 1188 (2006). "The court must construe the facts in the complaint most favorably to the plaintiff." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997). "[I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Batte-Holmgren v. Commissioner of Public Health, 281 Conn. 277, 294, 914 A.2d 996 (2007). By contrast, "[a] motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, supra, 498.
CPM contends that count two, the breach of contract claim, is legally insufficient because DeCrescenzo does not allege that he was assured of any specific outcome with respect to his request for insurance coverage. Although DeCrescenzo counters that CPM cites no persuasive authority for this position, Berlin Corp. v. Continental Casualty Co., Superior Court, judicial district of Hartford, Docket No. CV 06 4021653 (November 2, 2006, Wiese, J.) (42 Conn. L. Rptr. 358), relied on by CPM, is directly on point.
In Berlin, the owner and operator of a beverage mart were sued for negligent sale of alcohol. Id., 358. Upon learning that insurance purchased through an agent did not include liquor liability coverage, the owner and operator sued their insurance agent, alleging that the agent negligently failed to provide adequate insurance coverage and breached an oral contract by failing to procure liquor liability insurance. Id., 358, 361. The court stated that "an allegation of professional malpractice, like that found in count one of the plaintiffs' complaint, does not generally give rise to a breach of contract claim," and that "[w]hen determining whether a complaint sets forth an independent breach of contract claim or merely dresses a malpractice claim in contract language, the court examines the pleadings to ascertain whether the breach of contract alleged is based on substandard . . . care or exists irrespective of adherence to or deviation from the standard of care." Id., 361. The court then reasoned that "[a] fair reading of the plaintiffs' amended complaint reveals that the plaintiffs' cause of action hinges not on whether the defendant executed specifically agreed-upon tasks required of it pursuant to a contract, but whether the defendant exercised ordinary care in effectuating the plaintiff's purchase of insurance." Id. Because the plaintiffs failed to allege "that the [insurance agent] specifically guaranteed a particular result and that such a result was not delivered," the court granted the motion to strike their breach of contract count. Id.
When analyzing the insurance-related counts, the Berlin court looked to cases addressing medical malpractice. See, e.g., Rumbin v. Baez, 52 Conn.App. 487, 491, 727 A.2d 744 (1999) ("A breach of contract claim is a distinct claim that may arise from the same facts [as a medical malpractice claim] and may exist where the physician and patient contract for a specific result."). This court finds the reasoning in Berlin to be sound. Indeed, DeCrescenzo provides no explanation for why complaints alleging insurance malpractice should be treated any differently than complaints alleging medical malpractice for purposes of assessing related breach of contract counts. Thus, in order to survive the motion to strike, DeCrescenzo's breach of contract claim must include allegations of a specific promised result.
According to DeCrescenzo, the following allegations outline a contract for a specific promised result: 1) DeCrescenzo met with CPM and filled out applications for liquor liability and general liability insurance; 2) during the meeting, DeCrescenzo notified CPM of a "need for liquor liability coverage, due to the nature of the business that [he] intended to operate at the [bar]"; 3) during the meeting, CPM "agreed to initiate the appropriate and necessary process(es) by which [DeCrescenzo] could apply for and obtain the desired insurance coverage in question, including specifically liquor liability insurance"; 4) DeCrescenzo "relied upon the skill, knowledge and experience of [CPM] . . . to advise [him] properly regarding securing the liquor liability insurance in question, and to properly follow through with same to obtain the insurance in question"; and 5) DeCrescenzo "made a payment [to a CPM-owned entity] in the amount of $2,896.18 towards a liquor liability insurance policy, and towards a general liability insurance policy . . ." These allegations reveal only that CPM agreed to assist DeCrescenzo with the insurance application process; there is no allegation that CPM guaranteed the provision of insurance or any other specific result. The motion to strike count two is therefore granted.
Ursini v. Goldman, 118 Conn. 554, 173 A. 789 (1934), does not dictate a different result. In that case, the Supreme Court explained that a "principal may sue [an insurance broker] either for breach of the contract or in tort for breach of duty imposed by it." Id., 559-60. Although the Court did not expressly state that plaintiffs suing their brokers for breach of contract must allege a contract for a specific result, the plaintiff in that case clearly made such allegations. See id., 557 ("The plaintiff . . . told the defendant to obtain for him a [burglary insurance] policy of $2,000 and the defendant agreed that he would obtain such insurance and secure such protection for the plaintiff.").
Regarding count three, the CUTPA count, CPM posits that DeCrescenzo has not alleged immoral, unscrupulous conduct giving rise to a legally sufficient CUTPA claim, that the CUTPA count is actually a recast negligence count, and that DeCrescenzo has not alleged any CUIPA violations, a prerequisite for insurance-related CUTPA claims. DeCrescenzo asserts that he alleged "substantial aggravating circumstances" giving rise to a CUTPA claim and that his CUTPA allegations relate to the entrepreneurial aspects of the insurance business. Notably, DeCrescenzo does not acknowledge CPM's CUIPA analysis.
CPM's argument that the CUTPA count must fail due to its focus on negligence, rather than the entrepreneurial aspects of CPM's business, is compelling. In Silk, LLC v. Cowles Connell, Superior Court, complex litigation docket at Middletown, Docket No. X04 CV 03 103524 (May 25, 2004, Quinn, J.) (37 Conn. L. Rptr. 152), the plaintiff bar sued its insurance agents and brokers over their alleged failure to secure liquor liability insurance for the bar. The defendants moved to strike the CUTPA count on several grounds, including the ground that those allegations sounded in professional negligence. Id., 152. The court remarked that "there is no . . . direct extension of the professional conduct exception to insurance agents and brokers by our appellate courts. Nonetheless, the law that does exist is instructive. In Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., 260 Conn. 766, 781, 802 A.2d 44 (2002), the court found that CUTPA does not permit the regulation of every aspect of the practice of law. It stated `only the entrepreneurial aspects of the practice of law are covered by CUTPA.' See Beverly Hills Concepts, Inc. v. Schatz Schatz, Ribicoff Kotkin, 247 Conn. 48, 79, 717 A.2d 724 (1998) (a CUTPA claim will not lie for professional malpractice); Haynes v. Yale-New Haven Hospital, 243 Conn. 17, 34, 699 A.2d 964 (1997) (CUTPA does not lie in a professional negligence claim involving medical malpractice); Rumbin v. Baez, 52 Conn.App. 487, 490, 727 A.2d 744 (1999)." Id., 153.
The Silk court then noted that "Superior Court decisions have applied the reasoning set forth in these cases to the negligence of insurance agents and brokers." Id. It next stated: "Having reviewed the operative paragraphs of the complaint and the summary paragraph above quoted, the court concludes in this case that counts five and six sound in professional negligence. They do not deal with the entrepreneurial aspects of insurance agencies, but with their negligent failure to provide the insurance that was requested. These allegations, the court concludes, do not support a CUTPA claim. There is no logical reason why the exception established by the appellate courts for professional malpractice as not violative of CUTPA should not also be extended to insurance agents and brokers." Id.
Several other superior courts have similarly ruled that only the entrepreneurial aspects of insurance agents or brokers are covered by CUTPA. See, e.g., NL Trucking, LLC v. M.H. Chodos Ins. Agency, Superior Court, judicial district of New Haven, Docket No. CV 05 4011430 (September 23, 2005, Thompson, J.) (40 Conn. L. Rptr. 33, 34) (finding that "[t]here is no reason why the reasoning in Haynes and Beverly Hills Concepts should not be extended to insurance agents," and granting a motion to strike a CUTPA claim based on allegations of professional negligence); Krassner v. CPM Ins. Services, Inc., Superior Court, judicial district of New Haven, Docket No. CV01 0456362 (August 9, 2002, Booth, J.) (32 Conn. L. Rptr. 701, 702) (holding "that the CUTPA claim . . . is essentially a professional malpractice claim against an independent insurance agent," and granting the agent's motion to strike). This court finds the logic employed in the foregoing cases to be relevant here. Therefore, DeCrescenzo's CUTPA count can stand only if it is based on the entrepreneurial aspects of CPM's business.
DeCrescenzo argues that the allegation that CPM took finds for premium payments but did not secure coverage, thereby depriving DeCrescenzo of the use of his money, is sufficient to withstand the motion to strike. This allegation, however, clearly goes to CPM's negligence; in fact, the allegation is first included in count one, the negligence count. Indeed, with the exception of two allegations, namely, that CPM owed DeCrescenzo a fiduciary duty "to either procure the liquor liability coverage in question in a timely manner, or to apprise [him] at all times as to the status of said coverage, if same could not be obtained in a timely manner" and that CPM knew that liquor liability coverage was an important component of the coverage DeCrescenzo needed, the CUTPA count is basically identical to DeCrescenzo's negligence count. Because the CUTPA count is essentially a recast negligence claim, rather than a claim based on entrepreneurial aspects of CPM's business, the CUTPA claim is legally insufficient.
The court notes that even if it were to accept DeCrescenzo's argument that the CUTPA count is entrepreneurial in nature, DeCrescenzo's failure to allege any CUIPA violations is fatal to his CUTPA claim. In Mead v. Burns, 199 Conn. 651, 663, 509 A.2d 11 (1986), the Connecticut Supreme Court addressed the "circumstances, if any, [under which] conduct that does not violate CUIPA constitute[s] an unfair act or practice under CUTPA." The Court appeared unpersuaded by the plaintiff's argument that "the underlying public policy established by CUIPA will be affirmed by permitting a CUTPA cause of action even when there is no violation of CUIPA." Id., 665.
Following Mead, numerous superior courts have operated under the assumption that a CUTPA claim related to an insurance practice must be predicated upon a CUIPA claim. See, e.g., Professional Mechanical Contractors, Inc. v. Archambault, Superior Court, judicial district of Hartford, Docket No. CV 06 5003166 (August 21, 2007, Wagner, J.T.R.) ("Plaintiff has failed to allege a violation of CUIPA, a necessary prerequisite in a CUTPA claim involving an insurance broker."); Gabris v. Bjorklund, Superior Court, judicial district of Fairfield, Docket No. CV 03 0405907 (May 11, 2004, Dewey, J.) (plaintiff "cannot maintain his CUTPA action absent an underlying CUIPA claim"); Krassner v. CPM Ins. Services, Inc., supra, 32 Conn. L. Rptr. 702 ("plaintiff has not alleged a CUIPA claim and accordingly the CUTPA claim is stricken"); Steiger v. Giordano Associates, Inc., Superior Court, judicial district of New Haven, Docket No. CV 01 0448867 (February 27, 2002, Thompson, J.) (31 Conn. L. Rptr. 617, 618) ("[I]n this court's opinion, the Court in Mead . . . held that a plaintiff may not maintain a CUTPA action for an insurance practice which does not also constitute a violation of CUIPA."). This court adopts these superior courts' longstanding interpretation of Mead, and finds that the plaintiff's CUTPA claim must be stricken due to the absence of any allegations of underlying CUIPA violations.
Because the CUTPA count is legally insufficient for several reasons, the court need not address CPM's additional argument that the conduct alleged is not unscrupulous, oppressive or immoral.
For the foregoing reasons, CPM's motion to strike counts two and three is granted.